IMF to approve EUR 550mn loan for Bosnia

The International Monetary Fund (IMF) is set to approve a new, EUR 550 million loan to Bosnia and Herzegovina in early September, the Sarajevo daily Dnevni Avaz said on Monday, quoting IMF Resident Representative Francisco Parodi.

A formal decision is expected to be made at an IMF Executive Board meeting in Washington on September 7. The loan will be used by the country's two entities, with two-thirds of it going to the Bosniak-Croat entity, known as the Federation, and the remaining third going to the Serb entity, called Republika Srpska.

Instead of previous stand-by arrangements, Bosnia and Herzegovina and the IMF will conclude a long-term arrangement under the Extended Fund Facility, under which the loan will be disbursed successively over a period of three years. Repayment will start after the fourth year and will last six years, at an annual interest rate of slightly above 1%.

The loan will be used as support in stabilising the financial sector for the purpose of implementing the necessary reforms.

Parodi said that the aim was to improve the business environment, reduce public debt and administration, and preserve the stability of the financial sector.

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